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I can only speak for myself, and I am quire recently registered myself but this seems to work for me. Observations are what I see on a regular basis of what the children have received, I write down what they have done, attach photoevidence if i have it and link it to an area of learning and development. All my children are part time sometimes I do 2 observations a week and sometimes 1 a month. Then once a term I sit down with my tracker sheet and highlight where the observations tell me the children are, I use a different colour per term so over the sheet I can see there is a progression of learning.
Like I say I don't know if this is correct as although I've asked my local authority lead for a visit to check i'm doing things correctly I still havent received one.

Hope that helps, i'm sure someone more knowledgeable will be along soon.

There's no 'correct' method. You observe children all the time- watching and noticing what they do. You can make notes about this with or without photos. These are called observations- some are 'wow' moments (first time they walk, first time they use a spoon by themselves etc), some are interests ('Billy is loving the train set at the moment...'), some are when you notice things developing ('Billy is starting to play cooperatively by rolling the ball back...').
A tracker is just a way to show progress over time- 'tracking progress'. It is not a requirement. If you want to do it you can put it on paper using a grid of age against EYFS Areas/months. Just google it- there are many templates. Some use online systems to do the same, such as Tapestry or *****z.
Beware- the trend for schools to micro-measure progress in children is coming down to EY, more in nurseries though where they may do big cohort tracking, looking at progress data for 30+ children to look for gaps in attainment etc. We do NOT need to do this as CMers. We just need to know our mindees- are they on track against EYFS expectations? are they falling behind at all? do we need to give some extra support or get help for a particular concern?
Your EYFS course should be covering this- which course are you doing?

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